Author Question: Sergio acquires a $100,000 Ternco Corporation bond (5%, 20-year bond) on January 1, 2016 for ... (Read 82 times)

lracut11 · **on:** Sep 13, 2020

Question 1

Rana purchases a 5%, $100,000 corporate bond at issuance on January 1, 2016 for $91,500. The bond matures in five years. In 2016 Rana will recognize interest income of
◦ $0.
◦ $5,000.
◦ an amount less than $5,000 (but more than $0).
◦ an amount greater than $5,000.

Question 2

Sergio acquires a $100,000 Ternco Corporation bond (5%, 20-year bond) on January 1, 2016 for $75,000. The bond had been issue on January 1, 2014. If Sergio hold the bond to maturity, at redemption he will recognize
◦ $0 gain or loss.
◦ ordinary income.
◦ a long-term capital gain.
◦ a mix of ordinary income and long-term capital gain.

juiceman1987 · **Reply #1 on:** Sep 13, 2020

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